Indian budget carrier SpiceJet’s finances are not in the best of health these days. The airline has so far not declared the results of the last quarter, and there has been no indication of employee salaries being restored. And now, it has emerged that the carrier is looking to sell a partial stake to potential buyers to raise the much-needed cash.
Looking to sell stake
Low-cost carrier SpiceJet is looking for urgent recapitalization to maintain smooth operations. The airline is in talks with investors who could infuse capital into the business in exchange for partial equity.
The Times of India quotes the airline’s spokesman as saying,
“The company continues to be in discussions with various investors to secure sustainable financing and will make appropriate disclosures in accordance with applicable regulations.”
SpiceJet’s Chairman and Managing Director Ajay Singh currently holds a 60% stake in the airline. He started the airline in 2004 as India’s first low-cost carrier.
In 2010, Singh left the airline with other founders taking over control. However, by 2014, the carrier was on the brink of bankruptcy, and shortly after, Singh came back to re-acquire SpiceJet and saved it from going bust.
By 2019, SpiceJet was profitable again and expanding aggressively, but the success story changed completely following the COVID pandemic.
Middle Eastern carrier and Indian conglomerate are in contention
According to sources, more than one party is interested in acquiring a stake in the low-cost carrier. One of them happens to be a Middle Eastern carrier and the other an Indian conglomerate. As for the specifics, there have been no statements so far from any Gulf carriers or from India.
The TOI quotes a source to be saying that SpiceJet is
“in active discussion with a Middle Eastern carrier for a possible stake sale which has expressed interest to pick 24% stake and a board seat in SpiceJet. A big Indian business conglomerate has also approached Singh for a stake in the airline.”
SpiceJet did enter a codeshare agreement with Emirates back in 2019. But so far, neither Emirates nor any other Middle Eastern carrier has come forward with any statement.
Financial troubles
SpiceJet looking to raise money is not all that surprising given all the recent reports, which point to its dwindling finances. The airline recently made news when an aircraft lessor approached the Indian regulator, the DGCA, asking to de-register three of the carrier’s Boeing 737 aircraft.
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The airline has also delayed releasing its last quarter’s results, citing the ransomware attack a few months ago, and there have been no reports of its employees receiving revised salaries now that the pandemic is receding.
While we don’t know much about the potential investors, given SpiceJet’s urgent need for funds, a deal could likely come through sooner rather than later.
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Source: The Times of India